Can telcos break out of their current no-growth future?

An emerging USD 8 trillion addressable market in the IoT provides the opportunity for new growth.

The traditional telecom business model is flat lining. We anticipate that telcos will experience only 0.9% CAGR for the foreseeable future, worse for Europe. Relying on organic growth or mergers and acquisitions will only get telcos so far. Is there a new way for telcos to prosper?

Winning businesses, Google, Amazon, Alibaba and GE to name a few, are using the platform business model. With this model, the company operates as a facilitator of interactions and transactions between multiple parties (producers, developers and consumers). Value is largely derived through usage of the platform.

The World Economic Forum recently said, “we stand on the brink of a technological revolution that will fundamentally alter the way we live, work and relate to one another – a fusion of technologies that is blurring the lines between the physical, digital and biological spheres."*

This has been referred to as the 4th industrial revolution, where digital (social, mobile, analytics and cloud) and new accelerating technologies (sensors, AI, robotics, nanotech, biotech, solar energy and autonomous vehicles) are combining to create the internet of things (IoT) and opening up new markets for new types of services.

Our analysis shows that this market for IoT-enabled services could reach over USD 8 trillion in 10 years’ time, up from USD 0.7 trillion today.

Telcos now face a key strategic choice. They can be marginal players supplying connectivity, or they can actively stake out a more valuable role providing platform services that support IoT services management and monetisation. We call this approach digital ecosystem management.